RE: What’s holding this back28 Sep 2020 16:21
Hi Asb1, I hope in someway to answer your question and I also hope the rest of the board don't mind me posting this again.,
"I was also concerned why the SP has stalled and yet Lombard Odier Asset Management and now Harwood Capital LLP continue to increase their positions".
So I decided to look at some fundamentals to see if we can make sense of where we are and what will change the current sentiment. So here go's... "bare with" as they say .........
September 28th 2020 :
Market Cap. £24m - Cash in the Bank approx £12.45m ( £1.25m Cash burn since June 30th Report ).
1/2 Year Sales or Turnover to 30th June £6.1m with an operating loss of £2.5m
Current Margin = 48% so 1/2 year generated income approx £3.0m = Share Price 0.35p
In very rough terms our Sales Generated Income ( Profit ) is £6.0m pa and the cost to operate the business is currently £10m = £ 4.0m loss pa.
The cash raised at the end of May 2020 was intended for the following :
£1.1m First Phase of the New Facility 'Fit Out' in San Antonio
£4.0m Second Phase ---------------- " -------------------
£1.9m R&D
£5.0m Working Capital
On this basis the company needs to build the turnover very rapidly as the £5.0m working capital would be consumed by this time next year. Obviously that would only happen if sales stayed flat and there is no increase in operating profits.
So the target must be for full year 2020 a minimum of say £15m ( Revenue = £7.2m Loss = £2.8m ) less any savings from the company's move to Garforth, Leeds, in November 2020 ( £400k pa ).
So if the final year 2020 sales reach £15m producing a loss of £2.8m the Share Price should reflect that improvement and move to reflect the improvement to somewhere near 0.86p per share. That full year information will be RNS'ed in June 2021.
2021 :
New Facility San Antonio fitted out mid year.
Move to Garforth saving £400k pa
Full year Sales / Turnover needs to reach £20m Cost to run the business say rising to £11m pa
Income generated from £20m = £9.6m showing a yearly loss of £1.4m
If the 2021 turnover reaches £24m = £11.5m income (48% margin) same cost to run the business of £11.0m and therefore creating a potential £500k profit.
The SP should then reflect and be between 1.0p and 1.5p per share. ( Again after published accounts in June 2022 )
Gavin Jones ( Interim CEO ) said that with the full facility running in San Antonio the Sale figure could be £30m pa ++ especially if the 'White Label' supply agreement with a 'Global Healthcare Provider' is moving into full gear.
This post is just from my dig into the fundamentals and I hope it is a fair representation of the facts.
I'm sure there are some other interpretations but its intention is to shine some light on why the large Institutional Investors are very happy to keep on hoovering up loose shares at this current price.
PI's need to sit on their hands.
Chester.
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